09 March 2013

Singapore will relook its public
housing policies and try to bring down the prices of built-to-order (BTO)
flats.

While the housing policy had enabled
the vast majority of Singaporeans to own homes, it needed to be reviewed in the
light of significant demographic and economic changes, said Minister for
National Development Khaw Boon Wan Friday.

The primary mission of the Housing
& Development Board (HDB) remained offering affordable homes. To that end,
"we can now pause and see what else we can do to bring BTO
(built-to-order) prices in non-mature estates to say, around four years of
salary as it was before the current property cycle started," said Mr Khaw.

This, he said, will be achieved
partly through cooling measures to nudge the property market down and partly by
seeing if an alternative housing option can be designed.

The HDB will be ramping up flat
supply; 25,000 new flats will be launched this year, up from the earlier
announced 23,000 flats.

The Government will move to cap the
number of foreign tenants in each Housing Board block to prevent the growth of
foreigner enclaves.

National Development Minister Khaw
Boon Wan said in Parliament Friday that while the implementation details are
being sorted out, the Housing Board will cap approvals for all new HDB tenancy
agreements involving non-citizens, and those up for renewal.

The tenancy will be capped at 1 1/2
years with immediate effect, down from three years previously.

These changes, however, will not
apply to Malaysian tenants, as they face fewer integration challenges, Mr Khaw
said.

Two groups are going to find it
easier to get a new Build-to-Order flat from May: those who are downgrading and
divorcees applying a second time to buy a flat from the HDB.

This follows a doubling in the quota
of two-room and three-room flats in non-mature estates for the second-timers,
from 15 per cent to 30 per cent.

In announcing the move Friday,
Minister for National Development Khaw Boon Wan said: "This will help
second-timers needing to downgrade."

Of the quota, 5 percentage points
will be reserved for divorcees or the widowed who have children younger than
16.

This will "almost
guarantee" that they will be able to choose a two-room flat and
"significantly increase" the chances of those who apply for a
three-room flat, said Mr Khaw.

From this month, divorcees will also
be allowed to get a flat more quickly.

They can apply for or own two
separate subsidised flats three years after their divorce instead of having to
wait five years.

The time bar does not apply if they
are buying a new flat with a new spouse or their parents.

The ministry yesterday announced
another tweak to make it easier for divorcees.

From now, if one of them wants to buy
a subsidised flat during the debarment period, he or she does not need to get
the ex-spouse's permission as long as the buyer has legal custody of all the
children, who must be younger than 18 at the time of the divorce.

Older Singaporeans who want to age in
place, or live near their children, will get more priority under a new scheme
for studio apartments.

From May's Build-to-Order (BTO)
exercise onwards, half the supply will be reserved for seniors applying for a
studio apartment near their current flat, or near where their children live.

This will help elderly Singaporeans
"right-size", said Minister for National Development Khaw Boon Wan Friday.

The new Studio Apartment Priority
Scheme replaces the Ageing-in-Place Priority Scheme and the Married Child
Priority Scheme, which give more ballot chances to seniors applying for studio
apartments near their current flat, or near their child's home, respectively.

City fringe rental yields have
softened but landlords in areas like Balestier, Thomson and Outram are still
reaping good returns.

These areas are home to many shoebox
apartments, which are popular with tenants looking for a more affordable place
to live in.

This has resulted in rental yields of
around 5 per cent, while overall yields for city fringe homes dipped to 3.6 per
cent in the fourth quarter of last year - down from 3.8 per cent at the start
of that year.

The best performers were Balestier
and Thomson, in the Novena planning area, with yields of 5.3 per cent in the
fourth quarter, thanks to the high psf rents inked by shoebox apartments of 500
sq ft and less. The Outram and Rochor planning areas were second, with yields
of 4.4 per cent, while Queenstown apartments pulled in 4.1 per cent.

Standout performers like that cannot
hide the overall trend, which is a slight decline in yields.

Experts note that they have fallen
despite an increase in rents because average resale prices have increased at a
faster pace than rental growth.

Yields are expected to be squeezed
further as price growth moderates and more homes hit the market over the next
few years. The city fringe region had 10,000 unsold units as of 31 December,
most of them uncompleted.

A spate of new developments in Tanah
Merah has turned the area into a popular hunting ground for buyers. There have
been three new projects in the past years, with developers focusing on the site
surrounding the MRT station.

Tanah Merah's housing stock received
a major boost in 2009 when Casa Merah, a 556-unit condominium jointly developed
by NTUC Choice Homes and Wing Tai Holdings, was completed.

Optima@Tanah Merah, developed by TID,
was finished last year, while Urban Vista, next to the MRT station, is expected
to launch as early as next week.

And there is more to come. Keppel
Land unit Sherwood Development bought a site at the corner of New Upper Changi
and Bedok roads for $434.6 million last October. It is expected to build 700
units on the land.

While prices of flats there have
risen, rents are rising at a slower pace, compressing yields between 3.5 per
cent and 4 per cent as of the first quarter, said DWG senior manager Lee Sze
Teck.

But leasing demand and rental income
stability from residential properties in the area will be strong, with a
growing catchment of working expatriates, students and families there.

Average resale prices for suburban
condominiums exceeded $1,000 psf last month, the first time they have passed
what for many buyers is a daunting level.

Prices rose 5.1 per cent to a record
$1,046 psf in February compared with January, said the Singapore Real Estate
Exchange (SRX) Friday.

Average condo resale prices in the
city fringe were also up last month, adding 3.1 per cent from January to a
record $1,272 psf.

An analyst said prices in these areas
probably rose because buyers were going for smaller homes with lower total
quantums, likely in response to lower borrowing limits and higher cash down
payments imposed in January's cooling measures.

The continued growth in property
values combined with softer rents also squeezed rental yields.

Rents fell islandwide, with the
sharpest decline in the city fringe, down 1.9 per cent in February from
January. Suburban home rents fell 1.6 per cent and city centre rents decreased
0.4 per cent.

Yields dipped 0.2 per cent in the
city fringe and suburban regions last month from January, although they inched
up 0.1 per cent in the city centre.

However, rents for shoebox units -
flats up to 500 sq feet - went the other way, rising 1.8 per cent in psf terms
overall.

Shoebox apartments rented for $6.17
psf per month on average in suburban areas last month, twice the $3.07 psf for
larger units in the same region, according to SRX flash figures.

That was almost as high as
city-fringe shoebox rentals, which were $6.34 psf per month on average. Their
larger counterparts had monthly average rentals of $3.80 psf.

Rentals for city centre shoebox units
were $7.40 psf per month on average, 63 per cent higher than the $4.54 psf for
larger units in that area.